There are millions of American citizens struggling with their debt. The latest statistics from the Federal Reserve say that the average credit card balance...

There are millions of American citizens struggling with their debt. The latest statistics from the Federal Reserve say that the average credit card balance in indebted households is $16,140, and the average student loan debt is $31,946. According to the National Retail Federation, holiday shoppers are going to spend an average of $805.65 on gifts, and the majority of these will be paid for with a credit card, leaving shoppers with bigger balances come the New Year.

California consumer debt professional Steve Rhode says the debt issue in the USA is really just a simple math problem with a simple solution: spend less than you make. People need only take action. You may feel overwhelmed at the thought of taking action, but it actually works. If you are ready to act, here are some key things to help you manage your debt.

1. Keep track of your spending

If you want to get out of debt, the first thing you need to do is track your spending. Only then can you change your habits. The common reaction is to create a budget, but it’s usually just a page filled with overestimating your income and underestimating your spending. It’s important to form an accurate picture. Expenses management software with spending categories will clearly show your spending habits. People who start tracking their expenses immediately have as much as a 20% drop, simply because they are now paying more attention.

2. Then create a budget

Budgeting is not that difficult. You need to know how much money you get, and then you must control how much of it goes out. Calculate your monthly after-taxes income. Make a list of your mandatory expenses, such as mortgage/rent, utilities, groceries, insurance, etc. and their average cost per month. Determine spending patterns using your bank statements and receipts. Add up your expenses and subtract them from your income. If you are in the black, allocate discretionary money to savings. If you are in the red, you will need to shift your budget so that less money is going out, or more money is coming in.

Jamie Johnson, a 24-year-old bookkeeper in Los Angeles, creates a new budget from scratch each month. It helps her stay on track and dedicate $500 a month to debts. She owes more than $30,000 in credit card and student loan debts. The key here is to make realistic plans.

Try to create zero-sum budgeting, where every dollar that comes in is allocated as an expense or savings, whether it’s paying debts or buying coffee. Then there will be no questions about where your money has gone. You can use an online service to setup your budget, but a simple notebook also works. Don’t overcomplicate things.

3. Match your budget with a sensible debt-reduction plan

Before you begin paying off your debt, position yourself to be successful by establishing your emergency fund. You should be saving until you have at least $10,000 put away. Pay only the required minimums on all your debts while you are saving. This money is designed for emergencies, and that’s all it should be used for. This might not suit everyone (experts among them), but it is a good way to sock some money away for unexpected needs.

When you have an emergency fund established, it’s time to tackle your credit card debt (which will usually have a far higher interest rate than student loans do). Line up your debts from smallest to largest, and start by paying off the card with the smallest balance, thus working your way through the list.

4. Cut your expenses

Even though she was carrying a debt load that was crippling her, Leslie Hurtingon spent $250 monthly on fresh flowers for her house. Leslie didn’t want to stop buying flowers. To her, they signified who she was as a human being. Not buying them would mean giving up, admitting to be a failure.

Our debts end up being this emotional negotiation about what we are willing to part with. You need to ask yourself – what can you live without? Pushing yourself to extremities is not smart because it simply sets you up for failure. For example, rather than giving up completely on buying flowers, Leslie might buy a new bouquet every other week instead. She will save money but still feed her emotional needs.

You might be surprised at just how much room there is for saving in your life. Start with your dining and food budget. Sticking to cash can also help significantly. Decide how much you are likely to spend each week, then take that amount of cash and put it in a jar.

5. Find yourself a side gig

If you are determined to cut your debts, then you are going to need other ways to make additional money. For example, maybe you can rent a room out through Airbnb, or perhaps you can pick up some additional shifts at the theater on the weekend. Whatever you decide to do is totally up to you. Figure out how much additional cash you need to earn to make it happen and then go for it.